Malaysia's Securities Commission Proposes Reforms to Accelerate Cryptocurrency Listings and Enhance Oversight

Malaysia's Securities Commission has proposed a series of reforms aimed at accelerating the listing process for cryptocurrencies and enhancing the regulatory framework for digital asset exchange operators. The proposed changes, which include the introduction of new DAX rules, are designed to boost oversight and strengthen investor protections. The reforms are part of a broader initiative to liberalize the market and promote faster time-to-market for digital assets.

Under the proposed reforms, certain tokens may be listed on regulated exchanges more swiftly, provided they meet specific eligibility criteria. This move is expected to increase the variety of digital assets available to investors and enhance the overall liquidity of the market. The Securities Commission is also seeking to implement tighter asset safeguards and higher capital requirements for exchange operators. These measures are intended to ensure that operators have sufficient financial resources to manage risks and protect client assets effectively.

The proposed changes also aim to increase the accountability of DAX operators by introducing stricter regulatory standards. This includes enhanced reporting requirements and more rigorous auditing processes to ensure compliance with the new rules. The Securities Commission is seeking public feedback on these proposed reforms, with the goal of refining the regulatory framework to better meet the needs of the market while maintaining robust investor protections.

The reforms are part of a broader effort to position Malaysia as a leading hub for digital asset innovation and investment. By streamlining the listing process and enhancing regulatory oversight, the Securities Commission aims to create a more attractive and secure environment for digital asset exchanges and investors. The proposed changes are expected to accelerate the growth of the digital asset market in Malaysia, driving innovation and attracting more participants to the sector.

Malaysia’s Securities Commission has shared comprehensive reforms to its digital asset exchange framework. This is aimed at accelerating market development while strengthening investor protections. The proposed changes would enable qualifying digital assets to be listed on licensed platforms without requiring advance regulatory approval. The consultation paper, published on Monday, mentions a shift toward streamlined processes that could reduce the time-to-market for new cryptocurrency listings. Under the proposed framework, exchange operators would assume greater responsibility for assessing assets against minimum eligibility standards defined by the SC.

The proposed framework introduces mandatory client asset segregation requirements for all DAX operators. This action aims to protect investor money from commingling with exchange business capital, addressing a fundamental flaw in the crypto market. Increased capital requirements for exchange licenses form another key part of the regulatory reform. Operators must demonstrate increased capital adequacy to facilitate platform resilience in the event of market stress and operational disruptions. The SC aims to enforce stricter governance standards covering exchange management and risk controls. These guidelines aim to ensure that business practices are tailored to the unique risks of digital asset trading.

Current Malaysian law permits the ownership and trading of cryptocurrencies, but not their use as a form of legal tender for payment. The Capital Markets and Services Order regards digital assets as securities under SC jurisdiction, rather than central banking regulation. Approved exchanges are governed by the Recognized Market Operator regime, which encompasses anti-money laundering rules and consumer protection regulations. The SC also maintains an investor alert list of overseas non-compliant platforms that continue to operate despite lacking the necessary authorization.

The consultation period takes place between June 30 and August 11, 2025, to allow various stakeholders to provide feedback on the proposed amendments. The SC calls for comments from licensed exchange operators, digital asset issuers, financial institutions, and legal professionals. Institutional involvement has increased as traditional financial intermediaries enter the digital asset space. Enhancing regulatory reforms aims to promote such rising interest while promoting market integrity through enhanced oversight mechanisms. The reforms reflect international trends in the regulation of digital finance, enabling Malaysia to compete with other regimes in creating end-to-end cryptocurrency frameworks. Timelines for implementing the suggested changes will be based on feedback from stakeholders and the final rulemaking process. The SC stated that the approved changes would take effect after undergoing the consultation process and the necessary legal procedures.